The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Https://www.investorschronicle.co.uk/ideas/2023/01/10/four-potential-takeover-targets/
Anexo have just been highlighted by Simon Thompson as one of four takeover targets in 2023:
“Something has to give at Anexo, a provider of a litigation claims process focused on the recovery of credit hire and repair costs for the impecunious non-fault motorist involved in a road traffic accident. The £121mn market capitalisation company is rated on less than four times Panmure Gordon’s 2023 cash profit estimate to enterprise valuation even though it could earn a bumper pre-tax profit of £20mn-£25mn (after litigation funding and marketing costs) on its emissions scandal action against VW (on behalf of 13,000 claimants). A few months ago, chairman and 17 per cent shareholder Alan Sellers was a buyer at 127p a share”
I think The present economic climate, together with housing legislation , creates the perfect market place for ANX'S services .So at today's price I have made a modest top up. and will continue to do so as these buying opportunities arise. DYOR..
Good to see the Chairman buying another £100,000 of shares at 127.7p reported whilst I was on hols recently (bit of an admin disclosure delay there!):
Http://uk.advfn.com/stock-market/london/anexo-ANX/share-news/Anexo-Group-PLC-Director-PDMR-Shareholding/89367579
Hopefully the recent bounce will continue back up to 140p-150p for starters.
The goal is to get the housing problem fixed but where the lawyers believe the tenant is entitled to financial compensation, because the problems they have experienced have not been resolved for a considerable amount of time and have resulted in suffering then that is where Bond Turner make their money. So Bond Turner would aim to only proceed with those types of disrepair cases.
Sorry to be thick. With motor claims we presumably win financial compensation for the client. . What do we win for a housing repair client? Proper maintenance? How does that work for ANX?
WH Ireland retain their 263p per share price target.
They've adjusted their forecast for this year slightly to 18.4p EPS to account for a higher interest charge, rising to 18.9p EPS next year and then 21.9p EPS.
With a 1.7p dividend, rising to 1.8p then 2p.
They forecast this H2 to actually be cash-generative, due to the transition to much faster cash-generating activities like Housing Disrepair and Motorcycles.
Plus of course there's the likelihood of an immediate £20m-£25m cash inflow from the VW case in the next few months.
WH Ireland describe the potential from the additional emissions cases as a "multi-billion opportunity".
The H1 results look very good at first glance, with 9.3p basic EPS and confirmation that full year expectations will be met.
Housing disrepair growth in particular is terrific, and extremely profitable with £2.4m profit already.
Net debt is obviously up due to the strong growth, as are cash collections, and it's good to hear about the increased focus on cash collections in H2.
The share price has dropped to deep value levels here for no reason and should rebound nicely.
It will be good to see the H1 results in the morning.
Forecast results for 2022 H1 are Revenue £68.3m, EBITDA £21.4m, PBT £14m. (using WH Ireland's numbers)
It'll be interesting whether these are exceeded based on the trading update in June for 1st 4 months of 2022 which showed a 52% growth in the average vehicles on hire compared to 2021. In fact ANX has dropped 10% since that trading update despite being cash generative going forwards and defensive (unfortunately people don't crash vehicles less in a recession, and arguably the quantity of poor housing could increase in a recession).
Confirmation today that the H1 results will be on 20th September:
Https://uk.advfn.com/stock-market/london/anexo-ANX/share-news/Anexo-Group-PLC-Appointment-of-Director-Notice-o/88921653
The June AGM update was very positive and confirmed ANX were trading in line with expectations of 19.3p EPS this year.
A few punters may have exited recently due to the barristers' strike, thinking it might affect court cases, but elsewhere a poster has confirmed this is definitively not the case:
"I rang the IR guy about this. It won't affect Anexo as their actions are civil and not criminal; it won't make a difference to court timings either as criminal cases are heard in magistrate and crown courts and not civil courts."
Good to see a series of small buys this morning causing a 3p rise. Perhaps an overhang has cleared.
Good to see the share price bouncing somewhat. Perhaps a seller has been cleared.
As well as the WH Ireland note below, Arden also issued an update after the trading statement, with a 300p target price.
They forecast 18.8p EPS this rising, to 20.8p EPS next year, with 1.6p and 1.8p dividends.
And Progressive Equity's new note forecasts 19.6p EPS rising to 21.9p EPS (with 1.5p and 1.6p dividends).
WH Ireland issued an update note yesterday commenting on how the upcoming Housing Disrepair Bill is a "major opportunity" for ANX.
They have a 263p target price, and forecast 19.3p EPS this year - a P/E of just 6.6:
Extracts:
"Housing Disrepair – White Paper highlights major opportunity for ANX
We view last week’s White Paper as underlining again the significant opportunity for ANX’s Housing Disrepair business, which started operations last year and has already enjoyed notable success, as reflected in last Thursday’s AGM update. The White Paper is a harbinger of the much-touted Housing Reform Bill, announced in the May 2022 Queen’s Speech, having been delayed by the pandemic. Given its well-established pedigree in litigating on behalf of the impecunious, ANX is extremely well positioned to support tenants in recovering their rights when faced with disrepair issues such as damp, electrical hazards, roof leaks, and unstable structures. While accepting that the course of legislation is always uncertain as an act progresses through Parliament, we view this bill as starkly highlighting the problems facing hundreds of thousands of tenants – problems for which ANX can already provide redress as tenants become more aware of their rights."
"More than this, we believe the Bill will serve a fundamental purpose in alerting tenants to their existing as well as proposed new rights, and on both of these scores, this is supportive of ANX’s model, since it is likely to bring more claimants to them, given the base ANX has already established in the claims litigation market."
"Strong FY21 results and FY22E off to a good start Strong results on May 11th saw FY21A sales up 36% YoY, at £118.2m, and adj. operating profit of £27.7m, 48.1% ahead YoY. The company also saw its best ever level of vehicles on the road in Q4 2021 – and last week’s update shows that FY2022E got off to a good start with numbers strong in the first four months. With good momentum on both sides of the business in the current year, we are encouraged by recent progress. With a 263p target price, we believe the shares have a lot further to run and see current levels as a buying opportunity. We also note the recent VW / Therium settlement – LFL, we believe this implies a potential cash injection of as much as £20-25m for ANX, with further significant potential in Mercedes and other emissions scandal opportunities."
Progressive Equity have now issued an update note - their forecasts are even better than Arden's, being 19.6p EPS this year, rising to 21.9p EPS next year.
That's a P/E of 6.4 falling to 5.7. Plus the VW and Mercedes payouts to come in.
Enough said.
An encouraging AGM statement today.
ANX are trading nicely in line with expectations, i.e 18.8p EPS (with a 1.6p dividend).
That puts ANX on a current year P/E of just 6.7, with EPS forecast to rise to 20.8p EPS next year - and that omits any payout from the VW and Mercedes cases.
All divisions are trading well. I note that the new Housing Disrepair division has more thn doubled the number of its cases in just the last four months since the last year end to 3,300:
Https://uk.advfn.com/stock-market/london/anexo-ANX/share-news/Anexo-Group-PLC-AGM-Trading-Update/88377264
https://www.sharesmagazine.co.uk/events/event/shares-investor-webinar-150622
Here's Simon Thompson's overnight tip FYI:
"Efficient Market Theory dictates that markets are efficient,leaving no room to make excess profits by investing since everything is already fairly and accurately priced. But it breaks down in the under researched small and micro-cap segments of the stock market.
A good example is Anexo (ANX:133p), a provider of a complete litigation claims process focused on the recovery of credit hire and repair costs for the impecunious non-fault motorist involved in a road traffic accident. That’s because investors have yet to fully cotton on to Volkswagen’s £193mn out-of-court settlement for the Therium class action brought against the German carmaker by 91,000 emission scandal claimants.
Indeed, an out-of-court settlement looks a racing certainty for Anexo’s own action against VW (on behalf of 13,000 claimants) well before January’s court date. Arden Partners believe the £155mn market capitalisation company could earn pre-tax profit of £20mn-£25mn (after litigation funding and marketing costs) based on £3,000 to £4,000 per claim. Moreover, the proceeds secured can then be recycled into a potentially larger class action against Mercedes Benz, as well as deleveraging Anexo’s balance sheet. The windfall gains are simply not factored into current earnings estimates which already underpin bargain basement forward price/earnings(PE) ratios of 6.7 (2022) and 5.9 (2023)."
Just to re-iterate, Arden have a price target of 300p.
ANX were the first company tipped by the IC's Simon Thompson last night in his Bargain Shares small cap update.
Nice reaction already on relatively small buying hopefully indicates a lack of available stock.
Nick Dashwood Brown sounds very bullish and discusses ANX's strong final results and the VW emissions case:
Https://www.**********.co.uk/articles/nick-dashwood-brown-of-anexo-discusses-their-strong-final-results-and-the-vw-emissions-case-0c7c1e3/
I note ANX are also presenting via webinar for Shares Magazine on June 15th - free registration here:
Https://www.sharesmagazine.co.uk/events/event/shares-investor-webinar-150622
Great indicative result from the first Dieselgate claim - can't be long before ANX's claim is settled too. Then it's on to Mercedes Benz....
The upside here is shown by Arden's raising their target price to 300p (from 280p).
They have 18.8p EPS forecast for this year, rising to 20.8p EPS next year. That's a forward P/E of just 6.2.
Plus there's a 1.6p dividend, rising to 1.8p.
Carcosa I agree that in any case the revenue which could be generated will be very meaningful.
I disagree. What the arden note is saying is:
Say each claimant gets £2100. Of that, 50% of that goes to Anexo £1100
Say each claimant costs £2000 in legal fees. 100% of that goes to Anexo, totalling £3100
3100 x 13000 claimants = £40.3m less £4m marketing fees, less £20m litigation funding (fees, interest and a share of the proceeds), leaves = £20.3m pre-tax for Anexo
This may be the figure they (Anexo) expected to get should they win in court, which is now looks highly likely they would. Expect VW to want a quick out of court settlement at less than this amount though. Hopefully still a very decent return on investment for Anexo.
According to the house broker Arden's note today they estimate...
"...£3-4k per claim to Anexo, or £39-52mn in total. This would result in an estimated £20-25mn to the business pre-tax after £4mn of admin (largely marketing) costs and repaying litigation funding."
So the legal costs appear to make up an awful lot of the award.
I would have thought the broker note was a little bit crazy with their estimate but considering this is Arden's house broker then it must be close to the final estimated figure.
See Arden's website for full report
Yes, we'll have to wait a little longer, but as Carcosa points out, Anexo have claims of up to 50%. That should push my estimate below up to around 13-14m, assuming this precedent now sets a benchmark for the other cases.